NB: Yeah. It's going to be the PC. Really, what the answer is, whether you talk about software solutions, like the Media Center PC or what have you, all you have to do is have a PC with a good graphics card hooked to the internet, hooked to the living room TV, with good user interfaces, and boom, you're there. That's starting to happen more and more.

You don't think they'll find a way to get around that in China?

NB: Nope.

I'm skeptical of that. They always find a way.

NB: We always say that all of us are smarter than any of us, but when you have a private secret that is more than just a number -- that's an actual algorithm, in which the secret that's held in hardware -- you really can't get around it. Remember, games are a whole different ballgame than movies or music. If I can hear the music, I can copy it. If I can see the movie, I can copy it. Games, you're down into the bowels of code. You can maybe copy the concept, but you have to rewrite the game. And that is, in general, not a really doable thing.

But with hardware encryption, if your motherboard goes, so too do all of your games, unless there's something set up there.

NB: Well, key management is actually one of the areas that a lot of people are talking about, but in terms of monetizing your software investment, I think the thing has changed. I mean, software has always... you're always going to be able to crack it. Once it's cracked, it's cracked once and cracked for all, so there's an opportunity to it.

But when there's a different secret in every hardware system, crack once doesn't mean crack for all. I just think it's a really different thing. Remember, the reason you believe that China can crack any code is that up until now, it's been all of these software straw men who have said, "My system is crack-free." That's just not the case anymore.

It seems like maybe online registration keys are more feasible, in terms of being able to still have your game, if everything is connected online. If things are just stored locally, then developers or publishers...

TL: It also circles back to the whole idea of the whole advertising model of games. You're going to see more of that, and it lends itself to the PC and the combination thereof. You're going to see games that were being sold, six months from now, tests and trials of free-but-with-advertising-supported models with them.

NB: Yeah, there are a lot of games right now that were perfectly dreadful games last year and have zero market value, whereas if you play them for nothing or on an ad watch, all of a sudden there's some... the bad games are not quite so fail-hard.

In terms of having the PC be the future console for people, I think there's still a lot of consumer education that needs to happen for that to be possible.

One thing that he forgot to mention is that consoles can be extremely profitable if they adopt the correct business model, which Nintendo has set up. The console has to be able to be sold to at least break even on the hardware costs, which means using last gen PC hardware tweaked a bit.

The other saving grace of the entire gaming industry will be the adoption of real time ray tracing - because that will drop game development costs by a considerable amount. It would not at all surprise me to hear that the next version of both the Play Station and the Xbox use real time ray tracing on hardware that by then will be a few years out of date on the PC. ATi already has it working on the 2900XT and up through the 4870 and the framerate has been doubling every generation. In a few years when the big two consoles are up for replacement don't be surprised to see them both use this type of rendering.Edited by Jarhead - 7/7/08 at 4:02pm